The door opened wider to India’s infrastructure market on April 7 when government minister Kamal Nath called on international firms at a New York City conference to participate in his country’s mushrooming road and transport construction program. But firms looking to break into new markets and grow through cross-border acquisitions will find challenges along with the rewards, other panelists said.
“I seek engagement in all sectors,” said Nath, road, transport and highway minister, to nearly 400 executives from 20 countries at the Global Construction Summit, sponsored by McGraw-Hill Construction, parent firm of ENR. “This is going to be the decade of infrastructure.” He noted India’s aim to complete 7,000 km of highways annually to push development in large tracts of the country where isolation has stunted growth.
Other speakers touted global market potential elsewhere but with growing local and cross-border competition. China now is “world class” in high-speed-rail technology, claimed Shang Qingxi, deputy chief economist of government-owned China Railways Construction Corp. China will add 3,500 km to its existing 6,500 km of high-speed rail by 2012, with $145 billion in other urban mass transit investment also planned, he added. The firm also is targeting foreign work, including Brazil’s high-speed rail, to bid soon.
While once-booming work in Persian Gulf countries has cooled, one new Middle East hot spot is Libya, says James Thompson, CEO of international government services for AECOM, Los Angeles, which is managing the country’s $60-billion plan to build infrastructure after decades of political isolation. He counts in Libya more than 400 contractors and 500 consultants in a primitive working environment. “Things are still done by hand, and banking is antiquated,” said Thompson.
In terms of procurement strategies, public-private partnerships are going global, with interest up in Asia and Latin America, says Conor Kelly, managing director of Toronto-based Scotia Capital. But he acknowledged the credit crisis has stemmed the flow of deals. With the exception of Canada, “capital markets remain very close,” he adds. PPPs offer “lots of opportunities for design excellence and innovation,” says James Dougan, group president at PCL Constructors Inc., Toronto. But entry barriers are high on big jobs. “You need to have people who are very experienced and are collaborative in the way they work,” he said.
More contenders are boosting their potential through cross-border acquisitions, but finding the right buy and making the deal sustainable can’t be fast-tracked. Ian Tyler, CEO of U.K.-based Balfour Beatty, which recently acquired New York City-based Parsons Brinckerhoff, and Michel Jaski, a board member of Netherlands-based ARCADIS, which bought Malcolm Pirnie, White Plains, N.Y., both noted that it took four years to close each of the deals.